CapitaLand Commercial Trustcct-trust.listedcompany.com/newsroom/CCT_presentation_23_May_20… ·...

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CapitaLand Commercial Trust Singapore’s First Commercial REIT

Monday, 23 May 2016

Proposed Acquisition of CapitaGreen

Acquiring 60.0% interest in MSO Trust units

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Disclaimer

Proposed acquisition of CapitaGreen May 2016

The past performance of CCT is not indicative of the future performance of CCT. Similarly, the past

performance of CapitaLand Commercial Trust Management Limited, the manager of CCT, is not indicative

of the future performance of the Manager.

The value of units in CCT (CCT Units) and the income derived from them may fall as well as rise. The CCT

Units are not obligations of, deposits in, or guaranteed by, the CCT Manager. An investment in the CCT Units

is subject to investment risks, including the possible loss of the principal amount invested. Investors have no

right to request that the CCT Manager redeem or purchase their CCT Units while the CCT Units are listed. It is

intended that holders of the CCT Units may only deal in their CCT Units through trading on Singapore

Exchange Securities Trading Limited (SGX-ST). Listing of the CCT Units on the SGX-ST does not guarantee a

liquid market for the CCT Units.

This presentation may contain forward-looking statements that involve assumptions, risks and uncertainties.

Actual future performance, outcomes and results may differ materially from those expressed in forward-

looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples

of these factors include (without limitation) general industry and economic conditions, interest rate trends,

cost of capital and capital availability, competition from other developments or companies, shifts in

expected levels of occupancy rate, property rental income, charge out collections, changes in operating

expenses (including employee wages, benefits and training costs), governmental and public policy

changes and the continued availability of financing in the amounts and the terms necessary to support

future business.

You are cautioned not to place undue reliance on these forward-looking statements, which are based on

the current view of the CCT Manager on future events.

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Contents

1. Overview 04

2. Highlights of CapitaGreen 08

3. Call Option Conditions and Proposed Funding 15

4. Benefits to Unitholders 23

5. Next Steps 32

Slide No.

*Any discrepancies in the tables and charts between the listed figures and totals thereof are due to rounding.


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CapitaGreen, Singapore

Overview

5

Overview


CCT presently owns 40.0% interest in MSO

Trust which holds CapitaGreen

Holds call option to acquire remaining

60.0% interest from joint venture partners:

• CapitaLand (50.0%); and

• Mitsubishi Estate Asia (10.0%)

Note:

(1) Given that the proposed acquisition involves a transaction with an associate of CapitaLand,

CapitaLand has to abstain from voting on the proposed resolution.

Two key conditions to be met in order to

exercise call option to acquire 60.0% of

units in MSO Trust:

Market valuation must be equal to or

above hurdle price

Proposed acquisition of 50.0% interest

from CapitaLand is subject to CCT

Unitholders’ approval (1)

6

Transformation of Market Street Car Park into CapitaGreen, a premium Grade A office tower

July 2011

Regulatory10.0% development limit capped CCT‘s ownership to 40.0%; formed JV with CapitaLand and MEA

S$56 mil Market Street Car Park redeveloped under MSO Trust


Dec 2014

CapitaGreen developed at total cost of S$1.3 bil(1) and obtained temporary occupation permit on 18 Dec 2014

Proposed acquisition of

remaining 60.0% interest in MSO Trust by exercising call

option Acquisition price to be at

market valuation

May 2016

Note:

(1) Total development cost included a differential premium and other land related costs of S$651.5 million

paid to the government authorities.

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Ownership structure


Existing holding structure New holding structure after

acquisition of 60.0% interest

CapitaLand Commercial Trust

MSO Trust (1)

100.0%

Note:

(1) MSO Trust is a special purpose approved sub-trust that has been accorded tax transparency treatment by the

Inland Revenue Authority of Singapore.

CapitaLand

MSO Trust (1)

Mitsubishi

Estate Asia

50.0% 10.0% 40.0%

CapitaLand

Commercial

Trust

8


Highlights of CapitaGreen

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Property details

Tampines Grande’s Facade Note:

(1) Based on CapitaGreen’s annualised 1Q 2016 NPI, revenue occupancy of 77.7% and valuation

as at 6 Apr 2016.

Description 40-storey Grade A office tower with ancillary retail units

Site Area 58,971 sq ft

Gross Floor Area 882,681 sq ft

Net Lettable Area 703,122 sq ft

Committed Occupancy

92.8% as at 31 Mar 2016

Land Tenure Leasehold with balance term of 57 years expiring 31 Mar 2073

Car Park Lots 180

NPI Yield (1) 3.2% CapitaGreen at 138 Market Street,

Singapore 048946


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Centrally located in Singapore’s CBD

< Raffles Place Interchange (North South Line/ East West Line)

Tanjong Pagar MRT> (East West Line)

< Shenton Way MRT (Thomson East Coast Line)

Operational in 2021

Telok Ayer Station> (Downtown Line)

< Downtown MRT (Downtown Line)

One George Street >

Golden Shoe Car Park >

<

< HSBC Building Six Battery Road >

Capital Tower >

< Twenty Anson

http://www.google.com.sg/imgres?imgurl=http://sgwiki.com/images/thumb/c/cb/Singapore_MRT_logo.png/70px-Singapore_MRT_logo.png&imgrefurl=http://sgwiki.com/wiki/Mass_Rapid_Transit_(Singapore)&usg=__xvM4v0LrJix5jlajkjUUGdEchuo=&h=80&w=70&sz=5&hl=en&start=19&zoom=1&tbnid=P4gyzVuCZykw7M:&tbnh=74&tbnw=65&ei=gbGHUKnGN4y0rAeXx4CICA&prev=/search?q=mrt+logo+singapore&um=1&hl=en&cr=countrySG&gbv=2&tbs=ctr:countrySG&tbm=isch&um=1&itbs=1





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Environmentally sustainable design and high

quality specifications


Floor to ceiling height: 3.2m

Column-free floor plate of approx

22,000 sq ft

Wind scoop/Cool Void • Draws in cooler air from higher altitudes and

directs cool fresh air to office floors via the

Cool Void

Core to window depth: ~10m to 16m

Double skin facade • Reduces heat gain by up to 26%

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Accolades


Best Tall Building in Asia

and Australasia

Council on Tall Buildings

and Urban Habitat

Building Information Modelling

Award (Project Category)

Platinum

Building and Construction

Authority, Singapore

Best Office and Business

Development category

Bronze

MIPIM Asia

Green Mark

Platinum



Universal Design Mark

Platinum



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Well spread lease expiry profile with no leases due prior to 2018


Avoids the large, new supply in the Singapore office market

completing in 2016 and 2017

13%

24% 26%

37%

11%

23% 31% 35%

2016 2017 2018 2019 2020 2021 and beyond

Committed Monthly Gross Rental Income Committed Net Lettable Area

No leases expiring from 2016 to 2017

14

Diverse tenant business mix(1)

at CapitaGreen


Note:

(1) Based on net lettable area of leases committed at CapitaGreen as at 31 Mar 2016.

Majority of tenants from the Insurance, IT, Energy and Commodities, and

Banking and Financial sectors

Banking, Insurance

and Financial

Services, 47%

IT, Media and

Telecommunications,

21%

Energy and

Commodities, 20%

Real Estate and

Property Services, 5%

Education and

Services, 3%

Legal, 2% Manufacturing and

Distribution, 1%

Food and Beverage,

1%

Comprising:

Insurance - 26%

Financial Services - 11%

Banking - 10%

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Call Option Conditions and Proposed Funding

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Key conditions in call option agreement


Total development cost S$1.3 bil (lower than budget of S$1.4 bil)

Hurdle Price Based on actual costs incurred since

commencement of development in 2011

less net income received and compounded

at 6.3% p.a. The hurdle price was computed

as S$1,585.8 mil as at 6 Apr 2016(1).

Agreed value based on

market valuation (2)

as at 6 Apr 2016

S$1,600.5 mil (S$2,276 psf)

Based on average of: CBRE Knight Frank

S$1,599.0 mil (S$2,274 psf) S$1,602.0 mil (S$2,278 psf)

To exercise call option Market valuation must be equal to or

exceed hurdle price of S$1,585.8 mil as at 6

Apr 2016(1)

Notes:

(1) Notice was issued to JV partners on 6 Apr 2016 to start the process of exercising the call option.

(2) Valuation of CapitaGreen as at 31 December 2015 was S$1,587.0 mil (S$2,253 psf) by CBRE.

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Market valuation by independent valuers as at 6 Apr 2016

Based on leasehold of 57 years

Valuer Total Valuation

(S$ m)

Capital values

(S$ psf)

CBRE 1,599.0 2,274

Knight Frank 1,602.0 2,278

Average 1,600.5 2,276 (1)

Based on Capitalisation Approach and Discounted Cash Flow Analysis

Assumptions by independent valuers: Capitalisation rate: 4.15%

Terminal yield: 25 bps above capitalisation rate

Discount rate: 7.25%

Average market rent growth: 3.85% p.a. (over a 10-year period)

Note:

(1) Assuming a 99-year leasehold land tenure, the value of CapitaGreen is estimated to be approximately

S$2,700 psf by CBRE and Knight Frank.


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CapitaGreen’s valuation is comparable to CCT Grade A buildings

taking into account location, land tenure, age of building, etc

2,748

2,258

1,774

2,253 2,276

Six Battery Road

(999-year)

One George Street Capital Tower CapitaGreen

as at 31 Dec 2015

CapitaGreen

as at 6 Apr 2016

S$ psf NLA

Valuation comparables

Note: (1) Valuation as at 31 Dec 2015 unless otherwise indicated.


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Total acquisition outlay of approximately S$393 mil

S$ million

Agreed Value of CapitaGreen (100.0% basis) 1,600.5

Adjusted NTA of MSO Trust Units (100.0% basis) 305.6

Purchase Consideration (60.0% of Adjusted NTA) 183.4

Repayment of MSO Trust’s unitholders’ loans and accrued

interest to CapitaLand and Mitsubishi Estate Asia 198.5

Acquisition Fee (1) 9.6

Acquisition Related Expenses 1.5

Total Acquisition Outlay 393.0


Note: (1) Acquisition fee is computed based on 1.0% of the property value. As the acquisition constitutes an interested party

transaction, the acquisition fee for CapitaLand’s 50.0% interest will be payable to CCTML in the form of units in CCT and shall not be sold within one year from their date of issuance. The fee for MEA’s 10.0% interest will be payable in

cash.

CCT will also assume the remaining 60.0% of MSO Trust’s bank loan

which amounts to S$534.0 mil

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Pro forma aggregate leverage below 40.0% after acquisition assuming funding by bank borrowings


Notes: (1) Total gross debt includes CCT’s 60.0% interest in RCS Trust and 40.0% interest in MSO Trust. (2) Pro forma total gross debt includes estimated total acquisition outlay of approximately S$393 million and S$534.0 million,

the latter representing 60.0% interest in MSO Trust’s gross borrowings to be assumed by CCT upon the completion of the acquisition.

30.1% 37.7%

As at 31 March 2016 Pro forma

(1)

Pro forma aggregate leverage of 37.7%:

Below regulatory limit of 45.0%

Aligned with CCT’s capital management strategy to keep aggregate

leverage below 40.0%

(2)

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$148m$50m

$75m$100m

$100m

$480m

$120m

$40m

$200m

$222m

$150m$175m

$102m$356m

$534m(2)

2016 2017 2018 2019 2020 2021 2022 2023 (a

)(a)

S$

millio

n

(a

)(a)

$393m likely to

be spread out(1)

Pro forma debt maturity profile as at 31 March 2016

Assumption of S$534.0 mil debt from CapitaGreen’s existing borrowings and additional borrowings of approximately S$393 mil to fund proposed acquisition


Notes:

(1) Approximately $393 million of committed bank borrowings to fund proposed acquisition of 60.0% interest in CapitaGreen expected to be in smaller amounts with different maturity periods.

(2) Existing 60.0% of CapitaGreen bank borrowings

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Unitholders’ approval(1) required for acquisition of CapitaLand’s 50.0% interest in MSO Trust

CapitaLand

(50.0%)

CapitaLand

Commercial Trust

(40.0%)

MSO Trust (2)

Mitsubishi Estate

Asia

(10.0%)

Unitholders’

approval

required (1)

Notes: (1) Given that the proposed acquisition involves a transaction with an associate of CapitaLand, CapitaLand has to

abstain from voting on the proposed resolution. (2) MSO Trust is a special purpose approved sub-trust that has been accorded tax transparency treatment by the

Inland Revenue Authority of Singapore.


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Benefits to

Unitholders

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Benefits to Unitholders


Increase distribution per unit (DPU) to Unitholders

Augment portfolio quality for long-term growth

Reinforce CCT’s commercial foothold in the CBD of Singapore

Accessibility via major transport nodes

Served by numerous amenities that will benefit its occupiers

Enhance CCT portfolio’s resilience, diversity and quality

Increase in NLA of Grade A assets

Improvement of income diversification by property or tenant

1

2

3

4

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Increase DPU to Unitholders

Notes:

(1) Based on the assumption that the proposed acquisition of 60.0% interest in CapitaGreen was completed on 1 Jan 2016 and CCT held and operated the property through to 31 Mar 2016.

(2) Extracted from CCT’s 1Q 2016 financial results which already included contribution from CCT’s 40.0% interest in CapitaGreen in the 1Q 2016 distributable income and DPU.

(3) Took into account the acquisition fee paid in units based on certain assumptions

For illustrative purpose: pro forma financial effects(1) of the proposed acquisition

of 60.0% interest in CapitaGreen on CCT’s DPU for 1Q 2016

1

2.19 cts

2.22 cts(3)

1Q 2016 DPU Pro forma DPU after proposed

acquisition

1.4%


(2)

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In line with CCT’s portfolio reconstitution strategy

2

Grow portfolio

Increase occupancy

and rent

Enhance / Refurbish

asset

Unlock value at optimal stage of

property’s life cycle

Recycle capital

Value creation

2. Recycle capital: • Recycled sale

proceeds for redevelopment into CapitaGreen

• 40.0% stake as a JV partner in MSO Trust

3. Grow portfolio:

Acquisition of balance stake to own 100.0% of CapitaGreen

1. Unlock value: Sale of Market Street Car Park for redevelopment under MSO Trust

4. Organic growth:

• Committed occupancy at 92.8%

• Income upside with higher occupancy

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7,478.1

8,443.8

Before acquisition of 60.0% interest in CapitaGreen

After acquisition of 60.0% interest in CapitaGreen



Notes:

(1) Based on CCT’s existing portfolio valuation (including 40.0% interest in CapitaGreen) as at 31 Dec 2015.

(2) Based on CCT’s existing portfolio valuation as at 31 Dec 2015 and CapitaGreen’s valuation on 100.0% basis

as at 6 Apr 2016.

2

Increase investment property value of CCT’s portfolio to S$8.4 bil

(2) (1)

12.9%

S$ million

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Reinforce CCT’s commercial foothold in the CBD of Singapore


Accessibility via major

transport nodes

Close proximity to Raffles

Place and Telok Ayer MRT

stations

Served by numerous amenities

that will benefit its occupiers

Wide variety of food and

beverage options, hotels,

serviced residences, banks

and convenience stores

3

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Enhance CCT portfolio’s resilience, diversity and

quality: Increase in NLA of Grade A assets


4

CCT’s portfolio NLA (1) increases to 3.6 mil sq ft from 3.2 mil sq ft after

including 60.0% of CapitaGreen

61.8%

38.2%

Before acquisition of

60.0% interest in CapitaGreen

Grade A office buildings Other properties

66.3%

33.7%

After acquisition of

60.0% interest in CapitaGreen

Note: (1) Based on respective proportionate stake in CapitaGreen and Raffles City Singapore.

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quality: Reduce reliance on any single property


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Raffles City

Singapore (60%),

32%

Six Battery Road,

16%

Capital Tower,

14%

One George

Street, 12%

HSBC Building, 6%

CapitaGreen

(40%), 6%

Twenty Anson, 5%

Wilkie Edge, 3%

Bugis Village, 3%

Golden Shoe Car

Park, 3%

Before acquisition of 60.0% interest in CapitaGreen (1)

NPI as at 31 Mar 2016

Notes:

(1) For reference only: based on respective properties’ proportionate net property income (NPI) contribution in 1Q 2016. NPI from CCT’s wholly owned properties was $52.0 million, while NPI from 40.0% interest in CapitaGreen was $5.0 million.

(2) For reference only: based on respective properties’ proportionate NPI contribution in 1Q 2016 and as if the proposed acquisition of 60.0% of interest in CapitaGreen was completed on 1 Jan 2016 and CCT held and operated the property through to 31 Mar 2016. NPI from 100.0% interest in CapitaGreen was $12.6 million.

Raffles City

Singapore (60%),

30%

Six Battery Road,

14%

Capital Tower, 13%

One George Street,

11%

HSBC Building, 5%

CapitaGreen

(100%), 14%

Twenty Anson, 5%

Wilkie Edge, 3%

Bugis Village, 3%

Golden Shoe Car

Park, 2%

After acquisition of 60.0% interest in CapitaGreen (2)

Pro forma NPI as at 31 Mar 2016

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12.8%

5.1% 5.1%

4.0% 3.7% 3.7%

2.2%

11.5%

4.6% 4.6% 3.6% 3.3% 3.3%

2.1% 2.0% 1.5% 1.3%

RC Hotels

(Pte) Ltd

The

Hongkong

and Shanghai

Banking

Corporation

Limited

GIC Private

Limited

JPMorgan

Chase Bank,

N.A.

Standard

Chartered

Bank

CapitaLand

Group

Lloyd's of

London (Asia)

Pte Ltd

Robinson &

Company

(Singapore)

Private

Limited

Twitter Asia

Pacific Pte.

Ltd.

Cargill

International

Trading Pte

Ltd

Before acquisition of 60.0% interest in CapitaGreen After proposed acquisition of 60.0% interest


quality: Reduce reliance on any single tenant


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Note: (1) Includes CCT’s 60.0% interest in Raffles City Singapore and 40.0% interest in CapitaGreen.

Top 10 tenants to contribute 38.0% of monthly gross rental income after proposed acquisition

(1)

32 Proposed acquisition of CapitaGreen May 2016


Next Steps

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Estimated timeline (1)


Milestones Estimated timeline

Monday, 23 May 2016 Announce proposed acquisition of 60.0%

interest in CapitaGreen

June/July 2016 Dispatch of circular to Unitholders

3Q 2016

Convene an Extraordinary General Meeting to

seek Unitholders’ approval to buy from

CapitaLand - 50.0% interest in MSO Trust

4Q 2016

Completion of proposed acquisition (assuming

Unitholders’ approval obtained)

Note:

(1) Subject to changes by the Manager without prior notice

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Thank you

For enquiries, please contact: Ms Ho Mei Peng , Head, Investor Relations & Communications, Direct: (65) 6713 3668

Email: [email protected]

CapitaLand Commercial Trust Management Limited (http://www.cct.com.sg)

168 Robinson Road, #28-00 Capital Tower, Singapore 068912

Tel: (65) 6713 2888; Fax: (65) 6713 2999

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